It is concerned that successful protests would eventually place its current enemy the Muslim Brotherhood in power, a change that would force the country to reorganize itself.
Meanwhile, the Muslim Brotherhood has not compromised in its support for the unprecedented protests.
Western leaders have urged the threatened Mubarak regime not to resort to violence when handling the current situation across Egyptian cities.
Former Israeli military intelligence chief Aharon Zeevi Farkash said he did not understand why the US and Europe would demand democracy from Egypt.
I am astonished how western countries do not comprehend tension between Sunni Muslims who want to resolve problems with negotiations, such as the Hosni Mubarak regime, and the Shiites who want to resolve problems with armed resistance, he said.
Although Farakash said it was too early to speak on a revolution in Egypt. He said the possibility that the Egyptian army will restore calm is very large.
Israel is especially concerned that the Muslim Brotherhood, Mubarak's largest opposition, will be the first group to take advantage of the upheaval and gain power in the country.
The Israeli Haaretz newspaper said if Mubarak resigns the Israeli army would be forced to reorganize itself.
The force has not prepared itself in 30 years to cope with potential clashes with Egypt.
Military training since the second war with Lebanon placed focus on war with Hezbollah and Hamas and Syria at worst. But no one imagined the possibility of an Egyptian military contingency entering Sinai.
Peace with Cairo over the last three decades has relieved Israel of historic spending on military and allowed it an age exemption on back up military services.
The Muslim Brotherhood appears to be holding its ground, rejecting offers by Mubarak to make major adjustments to the present regime.
Mubarak instructed Civil Aviation Minister Ahmed Shafiq to reform the Egyptian government naming General Director of Military Intelligence Omar Soleiman as his vice-president, a position left vacant since Mubarak took office 30 years back.
The group called the decision an attempt to circumvent popular demands and thwart the revolution.
End item/ 129
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